CORPORATE GOVERNANCE REPORT Compensation and benefits of executive corporate officers 5 > understandable and demanding conditions, which are evaluated Use of a more appropriate panel, comprising operators in over a three-year period, in order to avoid windfall effects; the same sector as Klépierre, for the relative performance > varied conditions, which differ from those applicable to short-term criterion variable compensation and which are for the most part assessed Beginning in 2018, the panel used to test the relative performance based on financial and quantitative criteria along with criteria condition evaluated on the basis of TSR will be comprised of correlated with the environmental or social issues facing the Group. competitors in the shopping center sector, which are thus faced with The following adjustments are accordingly considered: comparable issues and business cycles. > a reduction in the weighting accorded to the absolute performance Until now, this assessment has been made by comparing the change criterion evaluated on the basis of TSR; in the Klépierre share price with that of the FTSE EPRA/NAREIT Eurozone index, an index that tracks all Eurozone real estate listed > the use of a more appropriate panel, comprising operators in the companies. However, this index is no longer suitable owing to a same sector as Klépierre, for the relative performance criterion; significant change in its composition. > an increase in the weighting accorded to the internal performance The weight of shopping center real estate companies in this index criterion based on the net rental income trend on a like-for-like has been falling steadily in the last few years. While these companies basis; represented 56% of the index in August 2012, they accounted for no > the introduction of a CSR criterion. more than 29% in December 2017. At the same time, the weight of other real estate categories such as the residential sector, has kept on A reduction in the weighting accorded to the absolute rising, from 11% in August 2012 to nearly 40% of the FTSE EPRA/NAREIT performance criterion Eurozone index now, driven by the significant growth of German residential companies. Beginning in 2018, the weighting of the absolute performance criterion, Yet the stock market performance of companies specialized in the based on TSR, will be reduced to 10%. housing sectors depend on factors that are very different from those This change echoes the recommendations made by certain key at work in the shopping centers sector. The same applies to the office investors to limit the weighting of the stock market criterion sector (14% of the index in December 2017). Real estate for housing used absolutely insofar as it is primarily influenced by external is in fact very dependent on regulatory factors in particular, while macroeconomic factors, unconnected with the work of the offices are more sensitive to the level of employment, and shopping management teams or their performance. centers to the level of consumption, inflation, and competition from e-commerce retailers. 3 FTSE EPRA/NAREIT EUROZONE INDEX WEIGHTINGS TRENDS SINCE 2012 60% 50% 40% 30% 20% 10% 0% / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / Offices Residential Shopping centers Diversified This is the reason behind the proposal to now assess Klépierre’s weighted index would therefore consist of the following securities: stock market performance with respect to the FTSE EPRA/NAREIT Unibail Rodamco SE, CityCon OYJ, Eurocommercial Properties, Eurozone index limited to companies that can be considered as true Deutsche Euroshop, Wereldhave N.V., Mercialys, Vastned Retail N.V., Klépierre peers, namely commercial real estate companies. The equi- Immobiliare Grande Dis, Atrium European Real Estate and Carmila. KLÉPIERRE 2017 REGISTRATION DOCUMENT 249